Pemex Pumps Pesos into Projects, Despite Petroleum Prices

Researched by Industrial Info Resources (Sugar Land, Texas)--Mexico's Petroleos Mexicanos (Pemex) (Mexico City) continues to run into financial hurdles, as it recently posted its 12th straight quarterly loss. But that isn't stopping the state-owned oil and gas company from making plenty of capital investments as it pushes to increase production and refinery throughput. Industrial Info is tracking 323 active Pemex projects worth $17.88 billion.

Pemex reported on October 28 a net loss of 167 billion pesos ($10 billion) in third-quarter 2015. A net loss of 60 billion pesos ($3.6 billion) was reported for the same period in 2014. The company said its latest results were affected by low oil prices and an unfavorable currency exchange rate between the Mexican peso and the U.S. dollar. Sales in the quarter amounted to 313 billion pesos ($18.8 billion).

Crude oil production reached 2.26 million barrels per day (BBL/d) in the third quarter, while natural gas production amounted to 5.5 billion cubic feet per day, Pemex reported, adding that each of those numbers represented a 1.8% increase from those in the second quarter.

Pemex said it was taking steps to improve its financial system. On November 13, it announced an agreement with the oil workers labor union to reform its pension system. Fitch Ratings (New York) said it expects the agreement to significantly lower Pemex's pension liabilities, which amounted to about $90 billion as of September 30. Pemex noted other measures, including an 11% budget cut of 62 billion pesos ($3.7 billion), which was announced at the beginning of this year.

Still, Fluor Corporation (NYSE:FLR) (Irving, Texas) announced Wednesday that ICA Fluor, the Mexico-based joint venture between Flour and Empresas ICA, S.A.B. de C.V. (NYSE: ICA) (Mexico City), will provide detail engineering, procurement and construction (EPC) services for part of Pemex's Tula refinery upgrade in Hidalgo, Mexico, for a contract value of $1.1 billion. The upgrade will increase the refinery's capacity to 340,000 BBL/d from 315,000 BBL/d, according to Fluor. Mechanical completion is scheduled for 2018. For more on the Tula refinery upgrade, see Industrial Info's project report.

Industrial Info is following 245 Pemex projects, valued at $7.2 billion, which are in the engineering and construction phases; and 78 projects, valued at $10.7 billion, which are in the planning phases, where plenty of factors can still impact their timing or even their ultimate outcome. At present, 215 of the projects are set to start construction in 2016.

By industry, in order of value, the Pemex projects include:

• $7.87 billion for 25 oil and gas production projects
• $4.25 billion for 108 petroleum refining projects
• $2.41 billion for 33 oil and gas pipeline projects
• $1.58 billion for 101 terminals projects
• $1.17 billion for 55 chemical processing projects
• $590 million for one power project

Listed below are the top 10 Pemex projects in terms of value. Four of them are tied to upgrades at Pemex's refinery in Salamanca, Guanajuato, and two involve the improvements at the Tula refinery in Hidalgo:

• $1.69 billion: Ayatsil-Tekel crude oil and natural gas floating-production-storage-offloading (FPSO) facility, located in the Ayatsil Field, offshore Campeche in the Gulf of Mexico.
  For more information, see Industrial Info's project report.
• $590 million: Cadereyta 380-megawatt power station, located in Cadereyta, Nuevo Leon.
  For more information, see Industrial Info's project report.
• $500 million: Miguel Hidalgo Refinery reformer unit addition, located in Tula De Allende, Hidalgo.
  For more information, see Industrial Info's project report.
• $500 million: Morelos ethylene glycol unit addition, located in Coatzacoalcos, Veracruz.
  For more information, see Industrial Info's project report.
• $300 million: Salamanca Refinery delayed coker unit addition, located in Salamanca, Guanajuato.
  For more information, see Industrial Info's project report.
• $250 million: Salamanca Refinery sulfur recovery unit (SRU) addition, located in Salamanca, Guanajuato.
  For more information, see Industrial Info's project report.
• $200 million: Salamanca Refinery reformer unit addition, located in in Salamanca, Guanajuato.
  For more information, see Industrial Info's project report.
• $180 million: Salamanca Refinery naphtha hydrotreater unit addition, located in Salamanca, Guanajuato.
  For more information, see Industrial Info's project report.
• $150 million: Miguel Hidalgo Refinery hydrogen unit addition, located in Tula De Allende, Hidalgo.
  For more information, see Industrial Info's project report.
• $150 million: Minatitlan Refinery diesel hydrotreater unit addition, located in Minatitlan, Veracruz.
  For more information, see Industrial Info's project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.